TREASURY

Employer Asset-backed Pension Contributions

Mark Hoban: The Government announced at Budget 2011 that they would consult on changing the tax rules in relation to employer asset-backed contributions to registered pension schemes. These contributions involve an employer making a series of payments guaranteed with security over the assets from which the payments derive. The joint HM Revenue & Customs (HMRC) and HM Treasury consultation took place between May and August, and sought views on options to ensure that excessive tax relief would not arise from the way in which some of these pension contributions were structured.
	Following the consultation, the Government have today published legislation that will be introduced in the Finance Bill 2012 to change the tax rules for giving relief to employers in relation to asset-backed pension contribution arrangements.
	The Government are keen to continue to allow the use of asset-backed contributions, given the flexibility they can offer to employers and their pension schemes in managing pension deficits, while protecting the Exchequer from tax risks.
	The changes announced will therefore ensure that the amount of tax relief received by an employer making these contributions accurately reflects, but does not exceed, the amount of payments received by the pension scheme. This means that employers will not gain unintended, excessive tax relief.
	Because of a significant risk to tax revenue, this legislation will have effect from 29 November 2011.
	The Government’s response to the consultation has been published alongside the legislation and tax information and impact note. These are available from the Budget 2011 pages of the HMRC website and the Finance Bill 2012 pages of the HM Treasury website.

ECOFIN (30 November 2011)

George Osborne: The Economic and Financial Affairs Council will be held in Brussels on 30 November 2011. The following items are on the agenda:
	Annual Growth Survey
	The Commission will present the Annual Growth Survey (published 23 November) for information. The Government support the document's strong positive messages on both fiscal consolidation and the need for ambitious structural reforms. However, the Government
	recall that member states and the EU have a shared responsibility for implementing structural reforms in support of growth. The Government also consider that tax policy is a matter for individual member states to decide, and does not consider that tax co-ordination in the EU is a priority for stimulating growth.
	Second economic governance package
	The Commission is expected to present three elements of a new package: a proposal for a regulation on enhanced surveillance of euro area member states that are either experiencing severe financial disturbance or requesting financial assistance; a further proposal for a regulation for enhanced budgetary co-ordination and surveillance of euro area member states, especially those that are already the subject of action under the excessive deficit procedure set out in the treaty; and a green paper setting out three options for the issuance of “stability” bonds in the euro area, which is intended to launch a public consultation on this subject. The Government are considering the proposals and options.
	Economic and financial impact of EU legislation
	The Council will discuss draft conclusions on the presidency’s proposal that ECOFIN should assess the impact of new EU legislation on growth and jobs. The Government support this objective.
	Annual Report of the Court of Auditors on the 2010 EU Budget
	The European Court of Auditors will present its report. It will be examined early in 2012, in advance of an ECOFIN vote on a recommendation for the European Parliament to grant discharge of the EU’s accounts for 2010. The Government consider that the failure to achieve a positive statement of assurance on the majority of payments from the EU budget year after year is unacceptable, and undermines confidence in the implementation of EU expenditure.
	EU Statistics
	Ministers will discuss draft conclusions on proposals to strengthen statistical governance. The Government support the general principles underlying these proposals; however, they will seek to work with other member states to ensure that national specificities are properly taken into account as the legislation passes through Council.
	Council will also seek agreement on nominations to the European Statistical Governance Advisory Board.
	Code of Conduct (business taxation)
	ECOFIN will adopt conclusions on the work of the code of conduct group over the last six months. The code of conduct is an EU-level political agreement between member states to work co-operatively to identify and eliminate harmful business tax measures in the EU and prevent the introduction of new ones. The code group’s report is a standing ECOFIN agenda item at the end of each presidency.
	Economic situation,  including bank ing package
	Ministers will discuss the economic situation. In particular, they will focus on the appropriateness of an EU-level co-ordinated approach to bank funding guarantees, as agreed at the European Council on 26 October. The European Commission currently sets a range of minimum criteria and guarantee fees under the state aid framework and the Commission is expected to present options for further co-ordination of bank funding guarantees provided by national Governments.
	The Government believe decisive action is needed to bring stability to the markets and provide the basis for long-term debt sustainability. The Government support the principle of co-ordinated bank funding guarantee schemes, conditional on maintaining national control over the provision of these guarantees. However, the Government would not support any proposals that expose the UK to the liabilities of banks elsewhere in the EU.
	Nomination procedure for the EIB President
	Ministers will discuss the nomination procedure for the EIB president. Philippe Maystadt, the current EIB president, was appointed in January 2000. It is permissible for him to be re-appointed when his current term ends in December 2011. Other candidates are standing.

TRANSPORT

Strategic Rail Freight Interchanges

Justine Greening: I am delighted to make this statement together with the Secretary of State for Communities and Local Government about the importance of rail freight and the need for a network of strategic rail freight interchanges to support growth and create employment.
	The UK logistics industry makes a significant contribution to the national economy, generating around £110 billion annually and employing more than 2 million people. The rail network transports over 100 million tonnes of goods per year. It is of strategic importance—rail freight delivers over a quarter of the containerised food, clothes and white goods, and delivers nearly all the coal for the nation’s electricity generation. Rail freight has expanded by 60% over the last decade, and is expected to grow by a further 30% up to 2019.
	Over recent years, rail freight has started to play an increasingly significant role in logistics and has become an important driver of economic growth. Given the right conditions, the Government believe that rail freight could make an even stronger contribution to the country’s economic recovery.
	The Government support the transfer of freight from road to rail, where it is practical and economic to do so and fully recognise that rail freight can generate valuable benefits for society where it provides an alternative to
	road haulage. Rail can deliver goods quickly, efficiently and reliably and help reduce both congestion on our roads and levels of carbon emissions. To secure this longer-term growth and modal shift, rail needs to be able to compete effectively with the use of road by heavy goods vehicles, and it is significant that in recent years our major retailers have been keen to choose rail over road for the long distance carriage of goods to market.
	However, this expansion in rail freight will be very difficult to deliver unless the industry is able to develop modern distribution centres linked into both the rail and trunk road system—“Strategic Rail Freight Interchanges”(SRFI)—in appropriate locations to serve our major conurbations. To date, this has proved extremely problematical, especially in the south-east where growing demand and increasing congestion on the road network are creating serious logistical challenges.
	The Government believe that an expanded network of SRFIs, complemented by other freight interchanges and terminals, is needed to support longer-term development of efficient rail freight distribution logistics. While SRFIs operate to serve regional and cross-regional catchment areas, they are also key components in national and international networks. These networks are of strategic importance in facilitating links between UK regions and the European Union.
	The Government are therefore taking measures to unblock the development of strategic rail freight interchanges and unlock the necessary private sector investment in such facilities. Pending the publication of the Department for Transport’s consultation document on the national networks national policy statement (NPS), a statement of current strategic rail freight interchange policy has been placed in the Libraries of both Houses and published on the Department’s website. It may be used by the Infrastructure Planning Commission (IPC) in its decision making on the development consent applications for SRFI infrastructure that fall within the definition of a nationally significant infrastructure project (NSIP) as defined in the Planning Act 2008.
	In parallel, the Department has asked Network Rail to provide industry support to the development of a network of SRFIs, working collaboratively with the wider logistics industry to: speed up the delivery of SRFI sites to meet business demand; assist with funding mechanisms (potentially including Network Rail funding); and establish appropriate delivery vehicles for rail infrastructure elements of such proposals.